Study: Younited points out the evolution of fractional payments in Europe

The European instant credit specialist, Younited, has just published the results of a study on fractional payments in Europe. The study highlights the expectations of European consumers, both in terms of instantaneousness and longer repayment periods. In this respect, however, France is a special case in this market.

FACTS

• Younited conducted a pan-European survey across 5 countries: France, Germany, Spain, Portugal and Italy. 2,500 people evenly spread across the 5 countries were asked about fractional payments.

• The study shows that consumer interest is growing, particularly in staggered payments and instantaneous services, provided that protection rules are strengthened.

• Overall, more than 70% of Europeans are aware of split payments and 1 in 3 consumers use them. In detail, the rates vary from one country to another:

  • 26% in Italy,

  • 34% in France and Germany,

  • 41% in Spain,

  • 48% in Portugal.

• Users mention three factors of interest for this method of payment:

  • the spread over time,

  • the possibility of balancing their budget

  • and the possibility of making ends meet.

• As far as the destination of the split payment is concerned, it is mainly used for the purchase of household appliances, high-tech devices and smartphones, furniture or travel.

• In France, 61% of users use it to make online purchases for small amounts and short repayment periods. 35% use it for purchases over 800 euros; and 63% opt for repayment over 2 to 4 monthly instalments.

• Another particularity of the French market is the level of trust: 53% of users have adopted it from a brand or site they already knew and which provided them with a reputational guarantee, evoking a well-known need for reassurance in the French market.

CHALLENGES

• Long-term growth: According to the Xerfi research institute, the fractional payment market should represent 25 billion euros in France and 250 billion dollars worldwide by 2025.

• The challenge of extending repayment periods: depending on the legislation in force in each country (in France, fractional payments without fees, which are not considered as credit, are limited to a period of 3 months), usage varies. Thus, only 22% of French users of split payments spread their repayments over more than 7 monthly instalments; this proportion rises to 54% in Germany and Italy, 49% in Spain and 40% in Portugal, where offers with longer repayments are available. The fact remains that the extension of repayment periods is a strong expectation, particularly in France where the average amount of purchases concerned is also expected to increase in the coming months.

MARKET PERSPECTIVE

• The democratisation of fractional payments is continuing at a rapid pace, despite the risks and a regulatory context that is still unclear. The revision of the EU directive is expected in September 2022. It should address the following key points: the obligation to display a clear schedule before taking out a loan, prior checking of customer accounts, credit checks and limits on real interest rates.

• In the meantime, offers such as that of La Banque Postale with Django present themselves as trusted solutions to meet growing needs.